The Australian Securities and Investments Commission (ASIC) today announced the release of updated guidance for businesses involved in Initial Coin Offerings (ICOs) and cryptocurrencies.
The regulatory agency said it drew the updated rules based on recent experiences with participants in the industry and claimed that in most cases, ICOs and crypto assets could easily fit into existing laws.
The updated guidance, thus, focused on how existing laws could apply to ICOs and cryptocurrency-related businesses.
An Overview of Australia’s Updated Crypto Guidance
Projects looking to issue an ICO must carefully evaluate based on provided directives, whether their token is a ‘financial product’ (security). If the firm determines that the offering is a ‘financial product,’ then they must comply with existing laws governing such fundraising effort.
If a project believes that their token is not a ‘financial product’ and can substantial evidence to back the claim, then they can file for an exemption.
ICOs must ensure that their promotional contents do not in any way mislead or deceive potential investors.
Cryptocurrency exchanges and trading venues qualify as financial marketplaces under Australian law. For this reason, operators must obtain a license from the regulators or apply for an exemption if they think they do not qualify as a financial marketplace.
The same license will also be required if a cryptocurrency exchange offers users the opportunity to invest in ICOs.
Crypto firms looking to sell products that offer investors exposure to cryptocurrencies will also need a license or a product authorization. Upon filing for approval, the ASIC will review the proposed product based on industry standards for such an offering and then decide whether or not to give its consent.
Speaking in the announcement, ASIC Commissioner John Price warned that the use of structures provided by crypto assets do not mean “key consumer protections under Australian laws do not apply or can be ignored.”